DOL seeks another delay to decide on fiduciary rule future

The Department of Labor remains undecided about what to do with the Biden-era Retirement Security Rule, its latest attempt to expand fiduciary duty.

The rule remains in limbo after a pair of Texas federal district courts issued stays last summer. DOL attorneys requested a 60-day delay from the Fifth Circuit Court of Appeals in April, citing the change in administrations and the need for new leadership to become familiar with the rule.

Attorneys asked for another 60-day delay on Thursday, which sets the next deadline on Oct. 28. Industry opponents did not oppose the motion, court documents say.

"DOL has informed us that additional time is needed to determine how to proceed in these appeals," government attorneys wrote in the motion.

Proposed in April 2024, the RSR seeks to amend the test for determining when an individual falls within the statutory definition of a “fiduciary” to an Employee Retirement Income Security Act plan. The expansion of fiduciary status would overhaul nearly all aspects of the traditional, commission-based insurance sales process, with many compensation practices banned and new compliance structures required.

The rule was scheduled to take effect on Sept. 23, 2024. But a pair of lawsuits, since consolidated, were filed. Plaintiffs include the Federation of Americans for Consumer Choice, the American Council of Life Insurers, National Association of Insurance and Financial Advisors, Finseca, Insured Retirement Institute, and the National Association for Fixed Annuities.

Plaintiffs argue that any DOL fiduciary rule must abide by the precedent set by a 2018 ruling from the Court of Appeals for the Fifth Circuit tossing out a 2016 fiduciary rule.

With that decision, a three-judge panel ruled that the 2016 rule strayed too far from the common-law definition of the term fiduciary, which hinges on the existence of a relationship of “trust and confidence” with the client. Agents who merely sell products to their clients do not have this relationship, the court concluded.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.